Iron ore holds near 3-month peak on higher Chinese steel prices

Reuters Staff

3 Min Read

* Shanghai rebar also clinging to near three-month highs

* Spot iron ore, at above $70/T, up more than 24 pct from Oct low

By Manolo Serapio Jr

MANILA, Dec 5 (Reuters) - Iron ore futures in China rose for a fifth straight day on Tuesday, trading near three-month peaks as steel prices sustained their strength amid production curbs in the world’s top steel producer.

The recent rapid gains in futures had helped boost spot iron ore prices to their highest level since September at more than $70 a tonne, up more than 24 percent from end-October when they touched a four-month low.

“The sharp increase in iron ore prices over the last week, despite steel production cuts in northern China, suggest that there is still enough available spare steel capacity in the market to push iron ore demand higher,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note.

China has ordered 28 northern cities to curb sintering by up to half during the winter period from November through March to fight smog. Sintering, where iron ore is processed ahead of steelmaking, causes heavy pollution.

The most-traded iron ore contract for May delivery on the Dalian Commodity Exchange was up 1 percent at 547.50 yuan ($83) a tonne by 0225 GMT, not far below Monday’s peak of 555 yuan which was its loftiest since Sept. 13.

The most-active rebar on the Shanghai Futures Exchange had risen 0.9 percent to 4,074 yuan a tonne, also near Monday’s three-month peak of 4,104 yuan.

Demand for medium to high-grade iron ore in China is also high, with most mills preferring them to boost productivity and limit emissions, traders said.